Edited by Claude Ménard and Elodie Bertrand
Chapter 5: Revisiting Coase on anticipations and the cobweb model
Ronald Coase wrote four articles on the cobweb model, or more specifically on the so-called pig cycle. The focus was on practical policy: the claim by the UK Reorganisation Commission for Pigs and Pig Products, in their 1932 Report, that government intervention was needed to stabilize prices in the pig industry. However, these papers, co-authored with Ronald Fowler and published in Economica between 1935 and 1940 (Coase and Fowler 1935a, 1935b, 1937, 1940), also grappled with a question of lasting importance in economics: the role of anticipations about the future, and more specifically of expectations of future prices. In this chapter we describe and assess the arguments presented by Coase and Fowler, and locate them within the subsequent development of the theory of expectation formation. Their papers are sometimes cited as being at the origin of Muth’s 1961 article on rational expectations. This is speculative, since Muth refers to the papers only briefly at the end of his article; and we are also doubtful that Coase would recognize the rational expectations hypothesis as capturing his own view.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.